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26-11-2015, 08:12 AM
(This post was last modified: 26-11-2015, 08:30 AM by Temperament.)
It’s time to lighten the load on these 10 stocks 
It is time to take partial profits on 10 popular stocks listed later in this column. These are great companies with great products, excellent market shares, good balance sheets, and good earnings growth prospects. In addition to good fundamentals, from a traditional technical analysis perspective, all of these companies remain a buy for the long-term investor.
“If both fundamentals and technicals are good, why take partial profits,” is the question. The answer lies in a very important concept that most investors and analysts tend to ignore at their own peril. The concept can be best described by one word, “over-owned.”
In the simplest words, stocks go up when there are more buyers than sellers.
What happens when almost everyone who is going to buy a stock has already bought it?
The answer is simple: There is no fuel to propel the stock upward.
There are also two adjunct concepts that must be fully understood before an investor can apply the concept of over-owned in an investment decision. First, for the most part, medium- to large-cap stocks move on the buying and selling by institutions and not on the actions of retail traders.
Second, daytrading, high-frequency trading, actions of market makers and other short-term trading simply creates lots of noise, but does not materially change the trajectory of a stock. The underlying trajectory of a stock is determined by the strong hands willing to hold the stock for the medium to long term. Short-term noise simply modulates the underlying trajectory.
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Let us review two real life easily verifiable examples of how this concept has been used on the foregoing stocks.
Apple
The Arora Report gave a sell signal right at the peak before Apple fell over $300 pre-split. One key component of our algorithms that made the call was over-ownership. This call can be easily verified if you have been a subscriber to The Arora Report or by reading MarketWatch
NVIDIA
In February 2011, Wall Street was excited about NVIDIA. The semiconductor company that traditionally made graphics chips had come up with a new chip called Tegra for use in mobile devices. When the stock was at $25.53, I not only gave a sell signal but also gave a short-sell signal and profited handsomely in my own account.
Part of the reason behind the call was over-ownership. At that time, every Wall Street analyst was bullish on NVIDIA and most targets were over $35. Fortuitously, my call coincided exactly with the top, and the stock subsequently fell as low as $10.88. This was, again, documented if you have been a subscriber to The Arora Report or in this case, on Seeking Alpha.
When to sell is a much harder discipline to master compared to when to buy. Consider incorporating “over-ownership” in your analysis and your bank account will be thankful forever.
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NB:-
Is this article a lot of Bulls or has some values for value investors
Or B & H till the cows come home for some believers?
It is time to take partial profits on 10 popular stocks listed later in this column. These are great companies with great products, excellent market shares, good balance sheets, and good earnings growth prospects. In addition to good fundamentals, from a traditional technical analysis perspective, all of these companies remain a buy for the long-term investor.
“If both fundamentals and technicals are good, why take partial profits,” is the question. The answer lies in a very important concept that most investors and analysts tend to ignore at their own peril. The concept can be best described by one word, “over-owned.”
What happens when almost everyone who is going to buy a stock has already bought it?
The answer is simple: There is no fuel to propel the stock upward.
There are also two adjunct concepts that must be fully understood before an investor can apply the concept of over-owned in an investment decision. First, for the most part, medium- to large-cap stocks move on the buying and selling by institutions and not on the actions of retail traders.
Second, daytrading, high-frequency trading, actions of market makers and other short-term trading simply creates lots of noise, but does not materially change the trajectory of a stock. The underlying trajectory of a stock is determined by the strong hands willing to hold the stock for the medium to long term. Short-term noise simply modulates the underlying trajectory.
/////////////////////////////////////////////////////////
/////////////////////////////////////////////////////////
Let us review two real life easily verifiable examples of how this concept has been used on the foregoing stocks.
Apple
The Arora Report gave a sell signal right at the peak before Apple fell over $300 pre-split. One key component of our algorithms that made the call was over-ownership. This call can be easily verified if you have been a subscriber to The Arora Report or by reading MarketWatch
NVIDIA
In February 2011, Wall Street was excited about NVIDIA. The semiconductor company that traditionally made graphics chips had come up with a new chip called Tegra for use in mobile devices. When the stock was at $25.53, I not only gave a sell signal but also gave a short-sell signal and profited handsomely in my own account.
Part of the reason behind the call was over-ownership. At that time, every Wall Street analyst was bullish on NVIDIA and most targets were over $35. Fortuitously, my call coincided exactly with the top, and the stock subsequently fell as low as $10.88. This was, again, documented if you have been a subscriber to The Arora Report or in this case, on Seeking Alpha.
When to sell is a much harder discipline to master compared to when to buy. Consider incorporating “over-ownership” in your analysis and your bank account will be thankful forever.
////////////////////////////////////////////////////
/////////////////////////////////////////////////////////////////
NB:-
Is this article a lot of Bulls or has some values for value investors
Or B & H till the cows come home for some believers?
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
